CFPB to seek OMB approval for testing of overdraft disclosures

Monday, November 20, 2017

The CFPB has published a notice in the Federal Register announcing that it plans to seek OMB approval to conduct online testing of ATM/overdraft disclosures with 8,000 individuals. Comments are due on or before January 16, 2018.

According to the notice, the testing “will explore consumer comprehension and decision-making in response to overdraft disclosure forms. It will also explore financial product usage, behavioral traits, and other consumer characteristics that may interact with a consumer’s experiences with overdraft programs and related disclosure forms.” The CFPB has issued a June 2013 white paper, a July 2014 report, and an August 2017 report on checking account overdraft services.

No supporting materials are currently available on www.regulations.gov. The CFPB’s August 2017 report was accompanied by four one-page prototype model forms for banks to use to disclose overdraft fees and obtain a consumer’s consent to the bank’s overdraft service for ATM and one-time debit card transactions. It is not clear whether the prototypes were intended as replacements for the current Regulation E model form. However, as the American Bankers Association noted in a letter commenting on the report and prototypes, unless the CFPB amends Regulation E and adopts one of the prototype forms as a new model disclosure, a bank could not use one of the prototype forms without foregoing the limited Regulation E safe harbor for use of a disclosure other than the model form.

When the CFPB released the prototypes, it stated in its press release that the prototypes were developed through interviews with consumers and it was testing them more widely. The new notice does not indicate whether the prototypes are the same disclosures that the CFPB plans to use in the online testing for which it seeks OMB approval.

Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

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